The latest data from Rightmove reveals the Bank of England’s decision to cut interest rates earlier this month has sparked a summer boost in homebuyer activity, with a 19% year-on-year increase in buyer demand since the announcement on 1st August.
The figures also show that nationally, average new seller asking prices have seen a seasonal drop of 1.5%, or £5,708, this month to an average of £367,785, although August has seen prices fall from July for the last 18 years.
However, Yorkshire and the Humber is bucking the trend and is the only part of the UK where asking prices increased, rising by 0.3% in August. This means the average asking price in the region is now £252,835, which is 3.5% higher than this time last year.
According to Rightmove the number of potential buyers contacting estate agents about homes for sale jumped by 11% on the prior year across the month of July and this is 19% up since the start of August, compared to the same time a year ago. In addition, the number of sales being agreed is now 16% ahead of the near-peak-mortgage-rate period of a year ago.
Rightmove’s weekly mortgage tracker shows that the average five-year fixed mortgage rate is now 4.80%, an improvement from 5.82% a year ago. The best available five-year fixed rate is now 3.83% for those with a 40% deposit, which is the lowest it’s been since the period before the mini-Budget in September 2022.
Patrick McCutcheon, head of residential at Dacre, Son & Hartley said “Speculation about when the first Bank of England rate cut would come had been a major uncertainty for the housing market, so when rates were reduced for the first time in four years, it was a big shot of positivity for the market.
“It created an immediate buzz and we’ve certainly seen an uplift in activity across our 20 offices since then. Another big change in 2024 is the increase in stock for sale, which had been severely restricted in recent years. Buyers now have homes to choose from throughout North and West Yorkshire and we’ve launched a wide range of unique and special properties in recent months that offer focussed buyers the chance to secure their forever home. All this should set the market up for a busy autumn period.”
Tim Bannister, Rightmove’s director of property science, commented: “The first Bank rate cut since 2020 has sparked a welcome late summer boost in buyer activity. While mortgage rates aren’t yet substantially lower since the rate cut, the fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment. As the summer holiday season comes to an end, the conditions are there for a more active autumn market. The reaction from home-movers to what is hopefully only the first of several rate cuts over the next year or two, combined with other positive data and trends, has led us to raise our price prediction for the year. We now expect new seller prices to rise marginally by 1% over the whole of 2024. This is a relatively small revision from our original prediction of a 1% fall in prices over the year, since we didn’t initially forecast anything more drastic than a slight drop in prices this year.
“Although it will likely take a few more cuts to the Bank rate for home-movers to see a more substantial reduction in mortgage rates, it’s home-mover sentiment that has immediately been heightened. Buyers and sellers are more optimistic about the outlook for the market, evidenced by the immediate upturn that we’ve seen in activity. However, though optimism around the direction of mortgage rates is justified, the reality is that they are still very high compared with a few years ago, and there will be some who need rates to drop further before their affordability is notably improved. Buyers are still stretched, and so sellers mustn’t get too carried away by the higher buyer activity levels compared with last year, and continue to come to market with a competitive price.”
